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Application portfolio management: How to get started

Where does a product manager start with application portfolio management? What are the first steps?

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Every product manager has to strike a balance between the top-down and bottom-up perspectives on what is important for their product. When undertaking application portfolio management, the bias of a product manager -- usually a director of product management -- will be toward additional emphasis on the top-down view of products.

You have to provide the vision for your portfolio.

The top-down view of products and portfolios starts with either the question, "Who is your company trying to be?" or, if you don't like personifying corporate entities, the question, "What is your company trying to do?" The strategy envisioned for your company is derived from the answer. Most companies struggle to define their identity and vision; or at least, they struggle to communicate that vision internally so that it guides product-level strategies. Companies do tend to be good at defining products' metrics (revenue, profitability, growth, market share, etc.), but when your portfolio is not being guided by a higher-level corporate vision, you have to provide the vision for your portfolio.

The major decisions for your portfolio start with the questions of correctness and completeness. Is each of the individual product strategies aligned with the portfolio-level strategy? When combined, do the products collectively manifest the complete portfolio strategy? When the answer to the first question is "no" for one of your products, adapt that product's strategy so that it's aligned. When the answer to the second question is "no," you have to revisit the portfolio-level strategy to see if it can be pared down, revisit one or more product strategies to ensure that the missing elements are incorporated, or figure out how to add products to the portfolio that provide the missing pieces.

Imagine that your corporate strategy is to make it easier for knowledge workers to work at home in order to reduce the environmental impacts of commuting and to increase the effectiveness of knowledge workers (by their avoiding time wasted in commuting). Your portfolio is focused on making it easier for software development teams to work in a distributed fashion. You have individual products focused on interpersonal communication, on the build/automation process that combines the contributions from distributed team members, and on an integrated development environment (IDE).

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Individual product managers will be making decisions for the individual products, but as a portfolio manager, you will be guiding their prioritization. For example, the IDE product manager may believe that the most important feature for a developer is syntax highlighting (which makes it easier for newer developers to write software). However, the portfolio-level strategy -- emphasizing distributed work -- might require that the IDE prioritize remote collaboration capabilities as part of satisfying the overarching vision. This could mean the development of features for pair-programming (allowing remote developers to collaborate on the code as it is being developed and see the same information as it is being typed/modeled/designed). To be effective at enabling collaboration, the IDE's simultaneous viewing capability would need to be coordinated with audio (or video), one-on-one conversation capabilities in the communication product.

The portfolio-level view starts with assuring that the right cross-product capabilities are being delivered to achieve the portfolio-level vision. Effective collaboration, manifested as capabilities in multiple products, is just an illustrative example. The first step for the portfolio manager is to figure out how the portfolio-level strategy (and the collection of capabilities across individual product strategies) support the company vision. The next step is to assure that the individual products support and embody the portfolio-level strategy.

This was first published in September 2013

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